In a rare example of bipartisanship in health care policy, the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 114-10) was passed by Congress and signed into law on April 16, 2015. Members of Congress from both parties came together to permanently replace the inherently flawed Medicare sustainable growth rate (SGR) methodology that had been used for nearly two decades to update the physician fee schedule with a payment system that incorporates coordinated and cohesive quality metrics. In passing MACRA, Congress reinforced Medicare's trajectory toward value-based payment with the Quality Payment Program (QPP), a departure from the status quo of volume-based reimbursement.

On Friday, October 14, 2016, the Centers for Medicare & Medicaid Services (CMS) published a final rule with comment period implementing MACRA's new QPP that offers clinicians two ways to be rewarded for delivering high-quality patient care: 1) join an advanced alternative payment model (Advanced APM), which will offer incentives for participating in innovative reimbursement models; or 2) join the Merit-Based Incentive Payment System (MIPS), which will provide a performance-based payment adjustment based on physicians' reporting.

Changes from Proposed Rule

On April 27, 2016, CMS released a Proposed Rule to establish physician incentives for participation in certain APMs and MIPS. In response to over 4,000 comments and feedback received in outreach sessions with over 100,000 stakeholders, CMS made several significant changes to the Proposed Rule when promulgating the Final Rule, which increases flexibility for MIPS participation by creating several go-at-your-own-pace options for clinicians to choose in the initial years of the program. It also adjusts the MIPS low-volume threshold. CMS has set 2017 as a transition year meant  to encourage clinician participation and prioritize education opportunities. To accomplish this, the Final Rule gives participating clinicians three paths to choose from within MIPS, including options with minimal reporting requirements that would allow clinicians to avoid negative payment adjustments. The rule also states that it anticipates this flexibility will extend into 2018, with an additional rule to be published in 2017.

In order to increase the potential for clinicians to participate in Advanced APMs, the Final Rule also allows for at least one new potential Advanced APM option, Medicare Shared Savings Program (MSSP) ACO Track 1+. It outlines the new Track 1+ option that is available to existing and new MSSP ACOs alike. This option will allow additional MSSP ACO models to participate in the QPP as an Advanced APM. In addition, it simplifies the "all-or-nothing" requirements for the use of certified electronic health record technology (CEHRT), establishes standards for the Medical Home Model and provides additional flexibility for small and independent practices.

Advanced APMs

The Final Rule establishes incentives for clinicians to participate in two types of Advanced APMs: Advanced APMs and Other Payer Advanced APMs. In order to qualify as an Advanced APM, the APM must: 1) require participants to use CEHRT; 2) provide payment for services based on comparable quality measures as required under MIPS; and 3) require participants bear more than nominal risk for financial losses or be a Medical Home Model. To qualify as an Other Payer Advanced APM, the APM must meet the same first two requirements as above as well as require that participants either bear more than nominal financial risk if actual expenditures exceed expected expenditures or be a Medicaid Medical Home Model.

Further, the Final Rule provides that CMS will publish determinations as to qualifying APM participants no later than January 1, 2017, so that clinicians will know whether they are excluded from MIPS before they have to submit required information to participate in MIPS. CMS estimates that the number of qualifying APM participants in 2017 will range from 70,000 to 120,000, which will grow to between 125,000 and 250,000 in 2018. CMS further estimates that qualifying APM participants will receive between $333 million and $571 million in APM incentive payments.


MIPS is a new program for eligible clinicians who participate in Medicare, defined as physicians, physician assistants, nurse practitioners, clinical nurse specialists, certified registered anesthetists and others who bill under Medicare Part B. It establishes a new quality-based payment framework built from evidence-based and specialty specific measures in combination with practical office-based improvement activities as established by Congress. Specifically, MIPS consolidates three existing programs: the Physician Quality Reporting System (PQRS), the Physician Value-based Payment Modifier (VM) and the Medicare Electronic Health Record (EHR) Incentive Program in order to create a coordinated, quality-based program without redundancies. The Final Rule sunsets the payment incentives currently provided under all three of these programs as of calendar year 2018.

At the core of the MIPS program is the ability to make payment adjustments based on clinicians' performance on quality, improvement activities, advancing care information and cost performance metrics. For the 2017 transition year, only three of the categories will be in effect: (1) quality; (2) improvement activities; and (3) advancing care information. The cost performance category has been weighted at zero percent for 2017.

In order to "fully participate" in 2017 and qualify for the highest possible final scores, clinicians must report on the following metrics:

  1. Quality: Quality measures will be selected through an annual process and published in the Federal Register by November 1 of each year. Clinicians then must report on six quality measures or, alternatively, one specialty or subspecialty-specific set of quality measures.

  2. Improvement Activities: Performance will be measured with relative weight on activities that focus on healthcare delivery improvements including coordination of care, engaging beneficiaries and population health management. The Proposed Rule would have required reporting six medium-weighted or three high-weighted activities. The Final Rule reduces the requirement to four medium-weighted or two high-weighted activities for full participation in 2017. Small and rural providers are required to report only two medium-weighted or one high-weighted activity. 

  3. Advancing Care Information: Performance will be measured on activities that incorporate the secure exchange of health information and the use of CEHRT to increase care quality and patient engagement.  The Final Rule reduces the reporting requirement from eleven measures to five, and makes all other measures optional. Reporting additional measures can, however, help clinicians achieve a higher score. In addition, CMS will award a bonus for any activities that use CEHRT to report to public health or clinical data registries.

  4. Cost performance: While this category will not affect clinicians' payment adjustments in 2017, CMS does intend to calculate performance on certain cost measures in order to provide feedback to clinicians. These calculations include total per capita costs for all attributed beneficiaries as well as a Medicare spending per beneficiary (MSPB) measure. 

The Final Rule estimates that the number of eligible clinicians who will be required to participate in MIPS in 2017 will range from 592,000 to 642,000. CMS assumes with a 90 percent participation rate by clinicians that the payment adjustments will be equally divided between negative and positive payment adjustment, ensuring budget neutrality. In addition, clinicians who receive a final score of 70 or higher will be eligible for the exception performance adjustment from a funding pool of $500 million.

Transitional year: 2017 (and most likely 2018, too)

CMS finalized a "transitional year" for calendar year 2017 that will allow health care clinicians to choose how to participate for 2017. The performance threshold that clinicians must meet in 2017 has been lowered to three points. The 2017 performance year will determine health care clinicians' payment adjustments in 2019.

There are four ways in which a clinician can avoid a negative payment adjustment in the 2017 transition year:

  1. Report to MIPS for a full 90-day period, or up to the full performance year, in all categories with full participation, which allows clinicians to maximize the potential for a positive payment adjustment. CMS considers "full participation" to be when a clinician submits all required information in all three performance categories: quality, improvement activities and advancing care information. Full participation for the quality performance category requires reporting on six quality measures or one specialty- or subspecialty-specific measure set; for improvement activities performance requires reporting on up to four activities; and for advancing care information performance requires reporting on five required metrics. In 2017, the cost performance category will have a weight of zero.

  2. Report to MIPS for at least a full 90-day period, and report more than one quality measure, more than one improvement activity, or more than the required measures in the advancing  care information performance category. This will ensure providers avoid a negative payment adjustment, but can also possibly make them eligible for a positive payment adjustment.

  3. Report one measure in quality, one activity in improvement activities, or report the required measures of advancing care information to ensure the clinician avoids a negative payment adjustment. MIPS eligible clinicians who choose not to report will receive the full negative four percent adjustment.

  4. Participate in an Advanced APM that meets the threshold of sufficient Medicare payments received through the Advanced APM or sufficient number of Medicare patients through the Advanced APM. Participation in an Advanced APM qualifies the clinician for a potential five percent bonus incentive payment.

CMS believes the staged approach laid out in the Final Rule will allow them to continue to develop policies that can both be practically implemented within the capacities and capabilities of the current system while continuing the drive towards patient-centered and quality-driven health care. Stakeholders reviewing the Final Rule are asked to continue to submit comments and feedback to CMS which is asking for the iterative process to continue through the early years of the program.

The Dentons team will continue to monitor CMS's implementation of MACRA, as well as any congressional action that may impact its enactment. 

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